COMMISSIONER OF INCOME TAX Vs. ARVIND S. PHAKE

JUDGEMENT

(1.) Heard the learned counsel appearing for the appellant. The challenge is to the judgment and order passed by the Income Tax Appellate Tribunal, Pune Bench A at Pune (for short "Appellate Tribunal") on 30th April, 2014. The substantial questions of law which are placed into service are the questions which reads thus:"

(2.) In this Appeal, we are concerned with the Assessment Year 2008-09. A return was filed by the respondent-assessee declaring his income on account of Long Term Capital Gain on sale of immovable property, income from business and profession of medical practitioner and other sources. The dispute before the Appellate Tribunal was in respect of part disallowance of exemption claimed by the assessee under section 54EC of the Income Tax Act, 1961 while computing the Long Term Capital Gain on the sale of immovable property. The respondent-assessee was holding immovable property at Pune. He entered into a registered Development Agreement dated 13th September, 2007 in respect of the said property. The total consideration was agreed to be Rs. 5,32,00,000/- out of which a sum of Rs. 20,00,000/- was to be adjusted against the cost of construction of the area in the reconstructed building which was to be retained by the respondent-assessee. The construction of the said area was to be made by the developer. The Long Term Capital Gain was accordingly claimed at Rs. 5,32,00,000/-. The deduction under Section 54 of the said Act amounting to Rs. 20,00,000/- was claimed by way of investment in new residential property. The exemption under Section 54EC of the Act to the tune of Rs. 50,00,000/- was claimed on account of investment in National Highway Authority of India (NHAI) Bonds. Initially net taxable Capital Gain was claimed at Rs. 2,74,88,690/-. A revised return filed on 31st March, 2008 was filed as a result of a supplementary deed entered into on 30th March, 2010. As per the revised return, the Long Term Capital Gain was quantified at Rs. 1,87,28,690/-.

(3.) As indicated earlier, the real dispute before the Appellate Tribunal was in relation to the claim of deduction under section 54EC. The investment of Rs. 50,00,000/- was made in the Bonds of NHAI on 28th March, 2008 and Rs. 50,00,000/- in the Bonds of REC Ltd. on 22nd August, 2008. The Assessing officer held that investment in the bonds of NHAI was within the period specified under Section 54EC of the Act and the investment of Rs. 50,00,000/- made in the bonds of REC Ltd. was beyond the period provided in the said provision inasmuch as the investment made on 22nd August, 2008 was within six months from the date of the transfer of assets. The finding recorded by the Appellate Tribunal in the impugned judgment and order is that the physical possession of the property was given by the respondent-assessee to the developer on 1st March, 2008. The Appellate Tribunal observed that on the date of execution of the development agreement, full consideration was admittedly paid, and therefore, the contention of the department that the transfer was effected on 13th September, 2007 cannot be accepted. Therefore, taking the date of transfer as 1st March, 2008 on which day the possession was delivered, it was held that investment made on 22nd March, 2008 was well within the time specified under Section 54EC.